History
Banks have existed since ancient civilizations, when merchants and moneylenders exchanged currency and made loans. During the Renaissance period, the first modern banks appeared in Europe, with the first banks established in Italy in the 14th and 15th centuries.
These merchant banks offered financial services to traders and merchants such as loans and currency exchange.
Banking evolved and diversified over time, with the emergence of commercial banks, investment banks, and central banks. Commercial banks were concerned with serving the needs of individuals and businesses, whereas investment banks were concerned with underwriting and issuing securities.
Central banks, on the other hand, were in charge of monetary policy and the regulation of the money supply in the economy.
Types of Banks
| Type of Bank | Definition | Examples | Pros | Cons |
|---|---|---|---|---|
| Commercial Banks | A bank that provides financial services to individuals, businesses, and institutions. | JPMorgan Chase, Bank of America, Wells Fargo | Wide range of financial services offered, including checking and savings accounts, loans, mortgages, and credit cards. | Higher fees and lower interest rates on deposits compared to other types of banks. |
| Credit Unions | A non-profit financial institution owned and operated by its members. | Navy Federal Credit Union, Alliant Credit Union, BECU | Lower fees and higher interest rates on deposits compared to commercial banks. | Limited availability, membership eligibility requirements, and fewer financial services offered compared to commercial banks. |
| Online Banks | A bank that operates exclusively online, without physical branches. | Ally Bank, Discover Bank, Chime Bank | Higher interest rates on deposits and lower fees compared to commercial banks. | Limited access to in-person customer service and no physical branches for cash deposits or withdrawals. |
| Investment Banks | A bank that provides financial services to corporations, governments, and other large institutions. | Goldman Sachs, Morgan Stanley, JPMorgan | Specialized financial services such as underwriting securities, mergers and acquisitions, and investment advice. | Limited services offered to individuals and smaller businesses, and can be more risky due to involvement in the securities markets. |
| Private Banks | A bank that provides wealth management services to high-net-worth individuals and families. | JPMorgan Private Bank, UBS Private Bank, Credit Suisse Private Banking | Personalized and customized wealth management services, including investment management, estate planning, and tax planning. | Limited availability, high account minimums, and higher fees compared to other types of banks. |
Regulations for Banks
Banks are subject to a variety of regulations designed to protect consumers and maintain the financial system’s stability. These regulations differ depending on the country, but they typically include rules governing capital requirements, liquidity, and risk management.
Several federal agencies regulate banks in the United States, including the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
These organizations monitor banks’ safety and soundness, ensuring that they have enough capital and liquidity to withstand economic shocks.
Services Provided by Banks
Banks provide a variety of services to their customers, including:
1. Deposits: Individuals and businesses can make deposits at banks, which can earn interest over time.
2. Loans: Banks make loans to individuals and businesses, charging interest on the borrowed amount.
3. Credit cards: Credit cards are issued by banks and allow individuals to borrow money to make purchases.
4. Investment Services: Some banks provide investment services, such as brokerage accounts and retirement accounts.
5. Insurance: Some banks provide insurance products such as life and home insurance.
6. Online services: Many banks provide online banking services, which allow customers to manage their accounts, transfer money, and pay bills online.
7. Mobile banking: Some banks also provide mobile banking services, which allow customers to access their accounts and conduct transactions from their mobile devices.
Money insurance
1. Check to see if the bank is FDIC-insured: Deposits at most banks are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depository per insured bank. This means that if the bank fails, your deposits up to $250,000 are insured.
2. Choose a reputable bank: Select a bank with a good reputation and a long history of operation. This lowers the likelihood of the bank failing and losing your deposits.
3. Keep an eye on your accounts on a regular basis: Check your account statements on a regular basis to ensure that no unauthorized transactions have occurred. Any suspicious activity should be reported to the bank right away.
4. Protect your personal information: Never share your personal information with anyone, including your account number, Social Security number, or passwords. This lowers the likelihood of identity theft and fraud.
5. Diversify your deposits: If you have deposits that exceed the FDIC insurance limit, consider dividing them among several banks. This lowers the possibility of losing all of your deposits if one bank fails.
Pros and Cons of keeping money to the bank
Pros
• Security: Keeping your money in a bank ensures its safety because banks have a variety of security measures in place to prevent theft or loss.
• Interest: Banks offer interest on deposits, which means your money can grow over time.
• Convenience: Banks provide a variety of services, such as online banking, mobile banking, and ATMs, making it simple to access and manage your money.
• FDIC insurance: The Federal Deposit Insurance Corporation (FDIC) insures bank deposits in the United States up to $250,000 per depositor, per account, and per bank. This means that your deposits are safe up to this amount even if the bank fails.
Cons
• Fees: Some banks charge fees for various services such as account maintenance, overdrafts, and ATM usage, which can quickly add up.
• Relatively low interest rates: Banks typically offer lower interest rates than other types of investments, such as stocks or mutual funds, so your money may not grow as quickly.
• Inflation risk: Over time, inflation can erode the purchasing power of your money, and if your bank’s interest rate is lower than the inflation rate, you may be losing purchasing power.
• Restrictions: Banks may impose restrictions on when and how you can access your money, such as ATM withdrawal limits or transaction fees for certain types of transfers.
Banks public image
Banks’ public image is mixed, with both positive and negative perceptions. On the one hand, banks are critical to the economy’s functioning because they provide a variety of financial services to individuals, businesses, and governments.
They are seen as being in charge of protecting people’s money and providing credit, which can help people achieve their financial goals.
On the other hand, Banks have been linked to a variety of negative practices, including fraud, corruption, and excessive risk-taking. This has harmed public trust in banks, prompting calls for increased transparency, accountability, and regulation.
Banks have also been chastised for charging exorbitant fees and interest rates, making it difficult for some people to obtain financial services.
Events leading to a negative image
1. Contributoring crises: The 2008 financial crisis was caused in part by banks’ risky lending practices and the subsequent collapse of the housing market.
Many people lost their homes and jobs, and the government bailed out the banks with taxpayer money, causing public outrage and distrust.
2. High fees and charges : Banks are notorious for charging high fees and interest rates, which can be difficult for low-income individuals to afford.
Overdraft fees of $35 or more per transaction, for example, are charged by some banks and can quickly add up.
3. Scandals and fraud: Several scandals and cases of fraud involving banks have occurred over the years, including the Wells Fargo fake accounts scandal and the LIBOR rate rigging scandal.
These incidents have eroded public trust in banks and increased skepticism about their practices.
4. Executive pay and bonuses: Banks are frequently chastised for their executive pay and bonus structures, which many people regard as excessive.
For example, JPMorgan CEO Jamie Dimon received $31.5 million in total compensation in 2019, which many believe is far too high.
Working at a bank
Salaries:
Salaries in the banking industry can vary greatly depending on the job, location, and level of experience. Entry-level salaries can range from $30,000 to $40,000 per year, while mid-level salaries can range from $60,000 to $100,000 per year or more. Senior management positions can pay hundreds of thousands of dollars per year.
Many banks provide employees with performance-based bonuses and other incentives, which can significantly increase their overall compensation.
Everyday Life:
The daily life of a bank employee varies depending on their position and the type of bank they work for. Tellers, loan officers, financial analysts, and investment bankers are all common job titles.
Tellers may interact with customers to process deposits, withdrawals, and other transactions. Loan officers may spend time reviewing loan applications and deciding whether or not to approve or deny them.
Financial analysts and investment bankers frequently work in offices, analyzing financial data and advising clients on investments and other financial decisions.
Retirement Benefits:
As a form of retirement savings, many banks provide pension benefits to their employees. These benefits may be structured as defined-benefit plans, which guarantee a certain level of retirement income based on factors such as years of service and salary history.
Many banks have shifted away from traditional pension plans and toward defined-contribution plans like 401(k)s, which allow employees to contribute a portion of their salary to a retirement account and receive matching contributions from their employer.
Can Decentralized Finance (DeFi) change future banking?
DeFi (decentralized finance) has the potential to change the way banking is done forever. The emergence of DeFi offers a new way of creating and accessing financial services, where intermediaries such as banks are eliminated, and transactions are conducted on decentralized platforms using blockchain technology.
It offers a range of benefits over traditional banking, including faster and cheaper transactions, more transparency, greater accessibility, and the ability to operate 24/7. With DeFi, users can create smart contracts that automatically execute transactions based on predetermined conditions, making the process faster and more efficient.
While it’s still in its early stages, it has already piqued the interest of investors and the financial industry as a whole. Many believe that DeFi has the potential to disrupt traditional banking and financial institutions, particularly in areas such as lending, borrowing, and trading.
However, there are some difficulties and risks. In the DeFi space, a lack of regulation and oversight could lead to security breaches, fraud, and other types of illegal activity.
Furthermore, the high volatility of cryptocurrencies, which are frequently used in DeFi transactions, can put investors at risk.
FAQ
What bank is cash app ?
Cash App is a mobile payment service developed by Square, Inc. While Cash App itself is not a bank.
It’s possible to link to the following banks:
1. Wells Fargo
2. Chase
3. Bank of America
4. PNC Bank
5. USAA
6. TD Bank
7. Capital One
8. Navy Federal Credit Union
9. SunTrust
10. BB&T
How to set up an account
1. Install the Cash App: The Cash App is available for Android and iOS devices. To download and install the app, go to your device’s App Store or Google Play Store, search for “Cash App,” and then select the option to download and install the app.
2. Sign Up for a Cash App Account: After downloading and installing the Cash App, open it and tap the “Sign Up” button to create a new account. Enter your phone number or email address and create a password by following the on-screen instructions.
3. Link Your Bank Account: After you have created your account, the app will prompt you to link a bank account. Enter your bank account information, including your account number and routing number, to do so. You can also link your debit card instead.
4. Receive verification code: Cash App will send a verification code to the phone number or email address you provided during the sign-up process to verify your account. To complete the verification process, enter the code when prompted.
5. Set Up Your Profile and Settings: Once your account has been verified, you can customize your profile and app settings. This includes uploading a profile picture, creating a distinctive username, and enabling security features like PIN or Touch ID.
6. Begin Sending and Receiving Money: Now that you have a Cash App account, you can begin sending and receiving money with friends and family. Simply enter the recipient’s Cash App username or phone number, as well as the amount you want to send, to send money.
Provide your Cash App username or share your unique Cash App QR code with the sender to receive money.
How to transfer apple cash to bank
Apple cash transfers to banks are possible by following these steps:
1. Launch the Wallet app: Launch the Wallet app on your iPhone.
2. Tap on your Apple Cash card: In the Wallet app, locate and tap on your Apple Cash card.
3. Tap the three dots: Tap the three dots in the upper right corner of the screen.
4. Select “Transfer to Bank”: Select “Transfer to Bank” from the menu that appears.
5. Enter the amount to be transferred: Enter the amount to be transferred from your Apple Cash account to your bank account.
6. Select amount and continue: After you’ve entered the amount, press the “Next” button.
7. Choose your bank account: Choose the bank account to which you want to transfer the funds on the next screen.
8. Press transfer: After you’ve chosen your bank account, press the “Transfer” button to begin the transfer.
9. Transfer confirmation: Finally, confirm the transfer by entering your Apple Cash PIN or authenticating the transfer with Touch ID/Face ID.
What bank is cash app on plaid ?
Plaid is a third-party service used by Cash App to facilitate bank account linking and verification. It’s a financial technology company that connects bank accounts to apps and services such as Cash App.
The third party service works with a wide variety of banks in the United States, so Cash App is likely to support many of the same banks that Plaid does. It is important to note, however, that Cash App is not a bank and does not hold user deposits in a bank account. Cash App instead places user funds in pooled accounts held by its partner banks.
Overall, while Cash App uses Plaid to facilitate bank account linking and verification, each individual user is ultimately responsible for linking their own bank account and selecting which bank they want to use with the app.
How it works step by step
1. Install the app: In order to use Cash App, you must first download and install the app on your iOS or Android device. Open the app after it has been installed and create a new account.
2. Link your bank account or debit card: You must link a bank account or debit card to your Cash App account in order to send or receive money.
To do so, go to the app’s “Banking” tab and follow the prompts to enter your bank account or debit card information.
3. Fund your account: After you’ve linked your bank account or debit card, you can fund your Cash App account. To do so, navigate to the “Banking” tab and click “Add Cash.”
Enter the amount of money you want to add and then follow the on-screen instructions to complete the transaction.
4. Send or request money: You can now send or request money from other Cash App users if you have money in your Cash App account. Open the app and navigate to the “Pay” tab to send money. Enter the recipient’s username or phone number, as well as the amount you want to send.
To make a money request, go to the “Request” tab, enter the amount you want to request, and choose who you want to make the request from.
5. Receive money: When you receive money through Cash App, it is added to your Cash App account balance. The money can then be kept in your Cash App account or transferred to your linked bank account.
6. Withdraw money: Withdraw money from your Cash App account by going to the “Banking” tab and selecting “Cash Out.”
Choose the amount you want to withdraw and the linked bank account to which you want to transfer the funds. To complete the transaction, simply follow the prompts.
Check out similar topics:
Bankruptcy: A Comprehensive Guide to Starting Over Financially
Bank Identification Numbers (BINs): Will they still be relevant in the future?